Budget 2024

What is the Union Budget?

The Union Budget, also known as the Annual Budget of India, stands as the comprehensive financial statement detailing the government’s finances, revenues, and planned expenditures across various sectors. As mandated by Article 112 of the Indian Constitution, the Central Government annually presents its estimated receipts and expenses for the fiscal year, spanning from April 1 to March 31, before both houses of Parliament.

Prepared by the Finance Ministry in collaboration with Niti Aayog and relevant ministries, the Budget is typically released by the Finance Minister in February. This presentation encompasses several components such as the Annual Financial Statement (AFS), Appropriation Bill, Expenditure and Receipts Budget, Expenditure Profile, Medium Term Fiscal Policy, Fiscal Policy Strategy Statement, Macro-economic framework for the upcoming financial year, Demand for Grants (DG), and the Finance Bill.

The Union Budget comprises Capital, Revenue, and Expenditure Budgets and serves the primary goal of outlining the government’s financial records and strategies, aiming to foster comprehensive economic growth while enabling the execution of constitutional responsibilities such as ensuring social justice and equality for all.

Budget Frequently Asked Questions (FAQs):

How is the Union Budget prepared every year?

On February 1, 2024, an interim budget will be released as this year the Lok Sabha polls are to be held. The Union Budget for 2024-25 will however be presented in the first week of July 2024. 

The preparation of the Budget is a long process that starts six months before the date of presentation. This process of the important document that outlines the government’s fiscal policies, plans, and programs, begins in August-September.

In the budget-making process, the Finance Ministry initiates by issuing circulars containing guidelines to ministries and entities to express their needs. Ministries submit their financial data and estimates, which are then evaluated by top government officials. The Finance Ministry allocates revenue, consulting with stakeholders and resolving disagreements through discussions with the Cabinet or Prime Minister. 

Pre-budget meetings are held with various stakeholders for recommendations. A traditional halwa ceremony marks the start of Budget document printing. Finally, the Finance Minister presents the Budget to Parliament, summarizing key points and reasoning behind proposals. After discussions and approval by both houses, the Budget is sent to the President for approval.

What is the difference between Interim and Final Budget?

The government presents an interim budget when it does not have the needed time for the preparation of the final budget. Most of the time, it is presented when general elections are near and the present government leaves the task of preparing a full budget for after the results of the elections. As the Union Budget is valid till the end of the financial year, i.e. March 31, the spending rights of the government are only up to that date. So when the central government could not present the final budget before the end of the fiscal year, it requires parliamentary approval to incur expenses from the day the new fiscal year starts and until a new budget is passed. Technically it is just like the full budget and as the name suggests only for a temporary period.

What are a few interesting facts about Union Budget

1) Scottish economist and politician James Wilson from East India Company presented the first Union Budger to the British Crown on April 7, 1860.

2) On November 26, 1947, the first of the Independent India was presented. Finance Minister RK Shanmukhan Chetty presented it.

3) The Budget was printed at the Rashtrapati Bhavan until it got leaked in 1950. It was then shifted to a press at Minto Road in New Delhi and in 1980 a government press was set up in the North Block.

4) Until 1955, the Union Budget was presented in English. Later, the Congress-led government decided to print the Budget paper in both languages, Hindi and English.

5) Former PM Morarji Desai had presented 10 Budgets during his stint as FM from 1962 to 1969. He holds the record for presenting the most number of Budgets.

6) Under the Narasimha Rao government, Manmohan Singh delivered the longest Budget speech with the most words at 18,650.

7) For 92 years the Railway Budget was presented separately. It was in 2017 that it was merged with the Union Budget.

8) To date, there have been only two women who have presented the Budget. First was former Prime Minister Indira Gandhi who presented the Budget in 1971 as she also held the portfolio of Finance Minister. In 2019, Nirmala Sitharaman became the second woman to present the budget.

9) It was Sitharaman who began to present the Budget carrying in the traditional ‘bahi-khata’ with the National Emblem. She did away with the budget briefcase.

10) During the COVID-19 pandemic, the Union Budget for 2021-22, India had its first paperless budget presentation.

11) Nirmala Sitharaman delivered the longest budget speech in terms of duration as she spoke for 2 hours and 42 minutes presenting the Union Budget 2020-21 on February 1, 2020. She had to cut short the speech with two pages remaining.

What are the different types of budgets?

There are three types of budgets:

1. Balanced Budget: When the estimated expenditure of the government is equal to the expected receipts in a financial year then it is called a balanced budget. Though it ensures economic stability but is unviable at times of hyperinflation or recession. 
2. Surplus Budget: When the expected revenues of the government exceed the estimated expenditure in a fiscal year then it is called a surplus budget. It means that the government is earning more from taxes than it spent on public welfare.
3. Deficit Budget: When the government’s estimated expenditure exceeds the revenue in a fiscal year then it is called a deficit budget. Though it enables the government to spend more on public welfare it also increases the burden on the government by accumulating debts.

What is the difference between Revenue receipts and Capital receipts?

The various sources from which a government raises revenue are called government receipts. There are two types of receipts:

1. Revenue receipts: These are current income receipts from taxes, grants and all other sources. These receipts neither cause any reduction in the government’s assets nor any liability. There are two types of revenue receipts: Tax Revenue and Non-Tax Revenue.
2. Capital receipts: These receipts cause a reduction in the assets of the government or create liability. Borrowings, disinvestment – Resale of shares of public sector undertakings and recovery of loans are the government’s major sources of capital receipts.

What is the difference between Capital expenditure and Revenue expenditure?

The expenditure of the government is categorised in two ways:

1. Capital Expenditure: When the government spends to create assets like roads, railway lines, canals, hospitals, schools etc, or reduce its liability like loan repayment etc, then it is called capital expenditure. 
2. Revenue Expenditure: When the government, on the other hand, incurs expenditure that neither reduces liability nor creates any asset then it is called revenue expenditure. Salary payment to government employees,  providing free health and education services, maintenance of public property etc are constituents of revenue expenditure.